Dairy Industry Of Pakistan Marketing Essay

Dairy Industry Of Pakistan marketing EssayThe dairy farm industry of Pakistan is a very competitive industry and has huge potential. Unfortunately, dairy processors in Pakistan still have miles to c everywhere before they domiciliate exploit full benefits of this industry. The draw drudgery of the country has non been up to the mark and as a result the demand for dairy products outweighs the supply. Traditionally, people living in urban atomic number 18as preferred to gull fresh milk delivered to their homes by Gawallas. However with the passage of time, as people became more and more health conscious there was a shift towards the use of goods and services of UHT milk and its demand has been increasing ever since. In the UHT milk segment, pixilateds like Nestle Pakistan restrain and Engro Foods Limited have emerged as leading grocery store players. These fast(a)s with their good deal of financial resources have made huge investments in receiveting state of the art tech nology, manpower and strengthenceing their promotion efforts. Despite the item that local dairy processing industries have been able to match the quality standards of Nestle and Engro to a greater extent, these tights lack in their merchandiseing efforts. noon Pakistan Limited is one much(prenominal) firm which is being effected due to poor marketing efforts and has non been able to reap the benefits of the industry in which it operates.Noon Pakistan Limited is a punt of the Noon Family and has been marketing its products under the rat name of Nurpur. The firm enjoys market leadership in the stratum of butter. Initially when the firm launched its UHT milk the market reply was good. However with the passage of time, the trademark performance of Nurpur UHT milk has deteriorated due to mismanagement of marketing efforts. While management claims that they atomic number 18 able to sell whatever they produce, the market survey results prove that the prevailing performance of t he grass has not been up to the mark. The firm relies on the selling concept which is a short term burn up and undersized emphasis is being devoted to the concept of brand building. It is the need of the hour that Noon Pakistan Limited adopts a recollective term strategic near if it wants to secure its position in the market for grades to come.To study the issue being faced by Noon Pakistan Limited, a rigorous Literature freshen up was conducted followed by interviews with employees of the firm, retailers and consumer surveys. Financial analysis and comparison with Nestle and Engro was done. Even though Noon Pakistan Limited does not match the financial strength of its competitors, there be many ways in which the firm can improve its position in the market.The first step in building strong brands is to ensure that the brand has a high salience. The brand should have top of the mind recall and recognition. Unfortunately the survey results analyzed using SPSS softw ar proved that Nurpur milk is not the first brand which comes to the mind when a consumer wants to purchase UHT milk. Majority of the respondents could not even recall any advertisements of Nurpur milk. A major(ip) proportion of the respondents likewise highlighted the fact that Nurpur milk was occasionally short in the market. The results of the retailer interviews also prove that Noon Pakistan Limited has to improve its trade promotion schemes as majority of the retailers were not satisfied with accredited distribution practices of the company. The retailers highlighted the fact that the company should improve its promotion activities so that consumers start demanding Nurpur milk.Due to weak financial resources, Noon Pakistan Limited should implement alternative strategies to maintain its position in the market. The firm needs to invest in consumer promotion activities like in store sampling and taste trials. The firm also needs to focus on its BTL activities in order to strengthen the p erceptual positioning of the brand in consumer mind. The firm needs to revise its compensation policies with retailers and start providing goods on a credit basis to those retailers who have a good reputation in the market. In short, Noon Pakistan Limited should revise its current practices and operations. The firm should let go its old concept of selling and instead focus on building the equity of its brands if it wants to strengthen its position in the market for the future.2.INTRODUCTIONThe Noon GroupThe Noon Group of Companies is being managed by the Noon family. The group has qualified and experienced professionals. The Noon Group of Pakistan strives to improve its profitability and bulwark its stakeholders interest while maintaining highest quality standards and serving the community (About Us Nurpur Foods, 2012).The Noon Group of Companies has non-homogeneous business ventures and Noon Pakistan Limited is one such moneymaking venture of the Group. Apart from Noon Pakista n Limited a brief description of the other business ventures ar as follows-1. Noon Sugar Mills LimitedThis venture was incorporated in 1964 and manufactures white sugar. Initial crushing capacity was 1ergocalciferol MT of sugarcane which has been annexd to 4000 MT over the passage of time. In 1986 an alcoholic beverage distillery was setup to manufacture industrial alcohol. The total number of people employed is 683 and currently efforts are underway to increase the crushing capacity to 8000 MT/day (About Us Nurpur Foods, 2012).2. Pioneer Cement LimitedPioneer Cement Limited was incorporated in 1985 with a total investment of Rs.2660 million and return capacity of 630000 tons per annum. The plant is situated in Chenki, Khushab. The project was financed by a consortium of foreign lenders conduct by the Asian Development Bank. Efforts are underway for another line having a capacity of 6000 MT/day (About Us Nurpur Foods, 2012).3. Noon worldwide offstage LimitedNoon Internationa l Private Limited is a trading company which was established in 1972. The company employs 43 people including a team of 15 professional sales engineers. This firm represents various international companies of repute in Pakistan and markets their equipment in the fields of textile, power generation, sugar, fertilizer, chemical, steel, cement, food and milling (About Us Nurpur Foods, 2012).4. Textile Technics Private Limited corporate in 2004 with a total investment of Rs 100 million, Textile Technics is a joint venture between M/S Blue Reed of Spain and Noon International Private Limited. The project has a production capacity of 22000 meters of reed per annum (About Us Nurpur Foods, 2012).5. Textile ServicesTextile Services was established in 1994 and provides services to over 200 customers of Sulzer Textile Projectile Weaving Machines. The company employs 32 people and provides training, technical service and spare parts for clients (About Us Nurpur Foods, 2012).Noon Pakistan Limite dIncorporated in 1966 with a total investment of 553 million, Noon Pakistan Limited produces various products namely Butter, cease, UHT milk, HCLF, Pasteurized milk, Flavored milk, Juices, Water, Desi ghee, Honey and Jam. Installed capacity of the plant is 72000 Liters/2 shifts and there are 700 employees. Noon Pakistan Limited has been marketing its products under the brand name of Nurpur. The plant is located in Bhalwal, Sargodha while the head office is situated in Lahore (About Us Nurpur Foods, 2012).The company has not only built a strong reputation over the past years but has also been able to offer a strong product portfolio to its consumers. Noon Pakistan Limited believes in optimum utilization of resources in order to secure the interests of major stakeholders and fulfilling its obligation as a accountable corporate citizen by serving the community. The company also utilizes rigorous quality control procedures at all stages to ensure supply of quality products to consumer s. This has allowed the firm to increase its turnover from Rs 311.7 million in 2004 to Rs 2436.41 million in 2011 (Company Profile Nurpur Foods, 2012).The year 2011 was a challenging year for Noon Pakistan Limited. Energy Crisis, security situation match with devastating floods had exerted significant pressure on the economy and cost of living. Higher inflationary trends continued impacting their key products particularly related to fresh milk when shortages led to a cost increase of 16% compared to last year. Additionally, higher growth of their products led to severe filling capacity constraints and the market demand could not be met fully. Despite all these challenges, the management made serious efforts to achieve performance objectives by effective product mix, controlling fixed costs and locating unused-fangled cheaper sources of raw material. Economic trends, prolonged gas and electricity outages, severe competition in selling brands and procurement of raw milk are not exp ect to ease out during the coming months. Due to reduced buying power, trend in the market is changing fast as consumers are looking for cheaper products in small packages. Therefore the management at Noon Pakistan Limited has made plans to reassess the market requirements and also further improve their production efficiency (Noon Pakistan Limited, 2011). lotThe vision statement of Noon Pakistan Limited is as follows-Our vision at Nurpur is to be a transformative force in our community and world at wide-ranging and to serve as a model of a sustainable business alternative that nurtures accessible and economic well being in an environmentally huffy manner (Our Vision Nurpur Foods, 2012).MissionThe mission statement of Noon Pakistan Limited is as follows-Nurpur is committed to supplying the consumer and customer with the finest, high quality products and to be a leading industry in healthy and nutritious products. Nurpur supports these goals with a corporate philosophy of adhering to the highest ethical conduct in all its business dealings, treatment of its employees, and social and environmental policies (Our Mission Nurpur Foods, 2012).Core valueAt Noon Pakistan Limited, consumers are at the forefront of everything they do. The core values of the company include the generation of Ideas that can be constantly challenged to develop next generation solutions, to conduct business openly and fairly while competing fiercely at the same time, to encourage teamwork with single(a) flairs, to set tough goals that can be challenged and beaten, to value preservation of the environment and ensure sustainability of organic agriculture, to value mutually supportive transactionhips among members of local and global communities (Core Values Nurpur Foods, 2012).Awards and CertificationsNoon Pakistan Limited has won many prestigious awards and certifications which are First dairy company in Pakistan to be certified under ISO 220002005, Brand of the year award (2006-07) in t he category of Butter, Brand of the year award (2007-08) in category of Butter, Cheese and flavored milk and Brand of the year award (2008-09) in the category of Butter (Certifications Nurpur Foods, 2012).Three years production snapshotPRODUCTIONUNITS201120102009UHT Milk/teatime whitenerLiters30,940,07920,385,29016,246,333UHT Flavored milkLiters4,668,0714,075,4072,498,299UHT CreamLiters71,381461,722345,580ButterKilograms986,3351,011,925862,622Milk powderKilograms927,9431,160,508930,894CheeseKilograms203,146206,508194,020GheeKilograms34,37152,19031,331Pasteurized MilkLiters4,911,7782,663,2941,806,733Loose creamLiters3,490Jams and honeyKilograms34,03242,81223,735JuicesLiters4,421,39910,341,16010,402,443Adapted from the Annual Report (Noon Pakistan Limited, 2011).The production snapshot over the years shows that the production of UHT milk/Tea whitener, UHT flavored milk and Pasteurized milk has increased from 2009-11 while the production of UHT cream, Butter, Milk Powder, Cheese, Ghee, Jams and Juices has decreased from 2009-11. Loose cream was discontinued in the year 2011. The focus of the firm remains on strengthening its position in the UHT milk segment.The Purchase partTo study the operations of the Purchase Department, two interviews were conducted with the Purchase Manager. The findings of the interviews have been use to describe the function of the Purchase Department.The purchase surgical incision is responsible for purchasing all materials required by the head office and plant other then milk which is purchased at the milk collection centre in Bhalwal. Materials which are purchased by the department range from ordinary items like office and plant nonmoving to complex materials like Flavors, Spare parts for plant equipment and transportation vehicles, Chemicals, Fuel and everything related to the manufacturing process, Logistics and day to day operations. Demand for requisition comes from the factory and approval has to be given by the Managing Dire ctor. The purchase department currently has 4-5 employees. The purchase department stays in coordination with the plant and suppliers through phone and email and as such no software is currently being used by the department. The department uses a manual system of keeping records and storing files. The purchase department always keeps 3 copies of requisitions and delivery challans. One copy is sent to the plant, one copy is maintained with the purchase department and one copy is kept by the Purchase Manager. The major suppliers of Noon Pakistan Limited are SMC, Sitara Chemicals , Jason Foods and Danisco. Everyone is involved in the purchase process including the worldwide Manager, Purchase Manager and people from the plant. Payments to suppliers are made either on cash or credit through the head office. Credit terms depend on contacts and relations with suppliers and can range from 15 days up to a month. According to the Purchase Manager, Noon Pakistan Limited believes in maintainin g healthy relations with Suppliers and this is one of the key strengths of the department. The primary reason given for this was that Juices and Milk factories in Pakistan have no second option since suppliers are limited and few. They have to purchase materials from the specified suppliers and bargaining power of suppliers is high in this moot. However if relations are good with suppliers not only do suppliers cooperate but may also be lenient in terms of credit. In this regard price does not play a major issue but a greater issue is that of availability of materials from suppliers. The Purchase Manager also verbalise that in case of materials inevitable from local suppliers, the purchase department is given no time and purchase has to be made immediately. However when imported materials are required from foreign suppliers, the Purchase department is informed in advance as shipping takes time. There is no fixed pattern of purchases made end-to-end the year and it all depends on plant and market requirements. The quality of materials purchased is checked at the plant and if there are defects the merchandise is returned to the supplier. The Purchase Manager also stated that there is no HR department as such and the performance of the purchase department is monitored from the plant and by the Managing Director (Ashraf, 2012).DELIVERY CHALLANNoon Pakistan Limited1st Floor, Mustafa Centre, 45 F, Main Market, Gulberg Lahore PakistanNo._______ Date_________To,Manager, Noon Pakistan Limited, BhalwalThe following goods have been dispatched to you by Truck No_____________SRDescriptionQty. enumerateSupplierRemarks sympathetic Sign and Return Duplicate____________________ _________________Malik Mohammed Ashraf Bhalwal Store root word Company Internal DocumentsNOON PAKISTAN LIMITED, BHALWALDEMAND OF STORE TO BE PURCHASED DEMAND NO______DATE____________SRItem encryptNomenclatureSpecificationNameA/UQtyRequiredStock in HandLastPurchaseDateRate/UnitAmountRemarks_________ ___ _______________Store Manager General ManagerSource Company Internal DocumentsThe trade DepartmentTo study the operations of the Marketing Department of the firm, two interviews were conducted with the Marketing Manager.Marketing research activities are outsourced. The Marketing Department purchases monthly reports from antithetic marketing research agencies like AC Nielson and Tetra Pak. In this way the marketing department stays in touch with the latest trends and competitor activities. The Marketing department comprises of one marketing manager and a brand manager. The Marketing Manager reports to the General Manager of Marketing and gross sales while activities of the brand manager are monitored by the marketing manager. The brand manager is responsible for dealing with various agencies as all marketing research data and ATL as well as BTL activities are outsourced. Some of the agencies with which the marketing department works are SABB Marketing, Time and Space, Orient, H RK Communications, melodic phrase Communications, TOPAZ Communications and ADZ Communications. These agencies prepare designs of print ads and commercials. The brand manager discusses the various designs with the Marketing Manager and after making necessary amendments and recommendations approval is given to Marketing agencies. The Marketing Department does its planning in the beginning of the year in coordination with the sales Department. A monthly, yearly and 5 year plan is made. The Marketing Department is consulted in all strategic decisions made at the corporate level. There is no fixed method for determining the budget allocated to the Marketing Department and it all depends on various factors like last years profitability and market performance of various brands available in the market. In 2012, three new brands by the name of Yogo Yogo, Dairy Rozana and Jalwa have been launched. The Marketing Strategy of Noon Pakistan Limited is Differentiation strategy. However the strat egy to be adopted for each brand depends on the market performance and competitor activities. Since UHT milk is difficult to differentiate, the current strategy being adopted is to position it as a milk which is enriched with vitamins needed for healthy growth and development. The target market of UHT milk is Housewives and working females as well as males. Different SKUs are being used to target different Socio Economic Classes like the 1000ml pack is targeted for SEC-A while the 200ml and 250ml packs are targeted towards low income households. The main competitor brands of Nurpur Milk are Olpers, Milk Pak, Good Milk and Haleeb. The marketing department does not go for an offensive strategy because Nestle and Engro are huge giants with bundle of resources. Noon Pakistan Limited can be classified as an analyser because it is operating both in a stable and dynamic market. Another reason for not adopting an offensive strategy is that volumes are low. Importance is not given to gain sh elf space because production volumes are so low and everything sells out due to high demand of UHT milk. Recently a new brand by the name of Dairy Rozana has been launched as a flanker brand to compete with the Dairy Omung of Engro. The main weakness of the Marketing Department is that very little attention is being paid towards building brand equity. The department is focusing on increasing sales which is a short term approach sooner than focusing on building their brands (Khan, 2012).organisational Chart of the Marketing DepartmentSource Internal Company DocumentsThe Brand Manager is responsible for dealing with various Marketing Agencies and reports to the Marketing Manager. The Marketing Manager reports to the General Manager of sales and Marketing (Khan, 2012).The Sales DepartmentTwo interviews were conducted with the Sales Analyst of the firm to get insights regarding the operations of the Sales Department.The organizational structure of the Sales Department comprises of the General Manager of Sales and Marketing, National Sales Manager, Regional Sales Manager, Area Sales Manager, Field Managers and Sales Officers. The job description of the Field Manager and Sales Officer is the same but position of Field Manager is superior because those Sales Officers whose performance is consistently outstanding are made Field Managers. Territories have been assigned according to location and comprises of Central Zone, Southern Punjab zona and Northern zone which includes RWL/AJK, Hazara belt and Pakhtoon.K belt. Distribution is limited in Quetta and Multan because of heavy freight expenses. The process of forecasting yearly sales is that last years closing sales are doubled and the amount is set as the Sales Target for the next year. Sales Quotas are assigned to Salesmen depending on the Area and potential of salesman. Other factors which are taken into account while assigning quotas are the seasonality issue because milk production and its demand fluctuates throug hout the year. There are more than 280 distributors all over the country and each Sales Officer has to monitor and look after three to four distributors. The Sales department also relies on individual projections from the Sales Team when deciding upon monthly and quarterly targets. If a salesman is unable to achieve his target in the specified time, he has to achieve both, the remaining target as well as the target allocated in the next period. If targets are continuously not being achieved the Salesman is fired. The salesmen who achieve targets are awarded with bonuses and cash rewards. In order to actuate the sales team, a sales competition is held and winner of Sales Man of the Year is rewarded. Besides having a Sales competition, vacation trips are also mean to motivate the Sales Team. If targets set in the year 2012 are met, the entire Sales Team will go on a vacation to Dubai on the companys expenses. Noon Pakistan Limited has also started exporting its products to countries like England, Kenya and Afghanistan. The documentation process to export products involves the Performa Invoice, E-Form Attestation, Commercial Invoice, Packing List, Certificate of Origin and Analysis Report (Butt, 2012).Organizational Chart of Sales DepartmentSource Company Internal Documents production Portfolio and Price ListProduct PackingUnit/CtnRetailer Margin work PriceConsumer Price1.UHT MilkCtnsUnitsCtnsUnits1000ml126.09%101884.83108090200ml244.35%39116.2940817250ml275.97%58621.7621232.Chai mixCtnsUnitsCtnsUnits250ml276.38%53319.7456721200ml245.97%38516.04408173.ButterKGsUnitsKGsUnits200gm308.00%46392.6500100100gm6012.70%48848.85505550gm12013.20%53026.56003020gm30013.20%53010.66001210gm60013.20%5305.360061Kg white2011.80%850042595004754.CheeseCtnsUnitsCtnsUnits200gm cottage429.10%69301657560one hundred eighty200gm slice3616.10%55801556480180225gm chedder4014.90%59201486800170225gm spicy4014.90%59201486800170225gm mozarella4014.60%6980174.58000200450gm chedder2013.40%68803 447800390450gm mozarella2013.60%8800440100005001.8Kg mozarella413.10%51281282580014501Kg slice813.60%507263457607201Kg slice (KFC)813.60%507263457607202Kg Chedder412.10%3924981440011005.CreamP/TrayUnitsP/TrayUnits250ml274.20%120044.44125046.36.Pasteurized milkP/TrayLitersP/TrayLiters1000ml1011.70%6006067067500ml2013.30%60030680347.Flavored milkCtnsUnitsCtnsUnits250ml1213.30%23319.4226422200ml1212.10%21417.83240208.Pure juicesCtnsUnitsCtnsUnitsApple 1000ml126.10%7926684070Guava 1000ml126.10%7926684070Orange 1000ml127.10%8407090075Pineapple 1000ml126.10%7926684070Mango 1000ml126.10%7926684070Apple 200ml2411.80%32213.4236015Orange 200ml2411.80%32213.4236015Mango 200ml2415.40%31213360159.Yogo yogoCtnsUnitsCtnsUnits200ml128.70%276233002510.Desi GheeCtnsUnitsCtnsUnits1Kg67.50%2232372240040011.Jams1.5KgUnits1.5KgUnits strawberry 15gm60014.30%3853.854404.4Apple 15gm60014.30%3853.854404.4Marmalade 15gm60014.30%3853.854404.4Honey 15gm60014.30%3853.854404.412.Dairy Rozana1.5KgUnits1.5KgUnits10 00ml126.12%73561.2578065250ml276.11%45816.964861813.JALWACtnsUnitsCtnsUnits250ml276.21%48317.8951319200ml245.88%34014.1736015Source Company Internal DocumentsMarketing rumple of Nurpur UHT milkNurpur UHT milk has been positioned as a milk which is enriched with vitamins needed for healthy growth and development (Khan, 2012). The milk is packed in Tetra Aseptic Packaging which allows long lasting storage and shelf space. Currently three SKUs are available in the market which are 200ml, 250ml and 1000ml. Initially the pricing policy adopted for Nurpur milk was market penetration pricing, which means prices were low compared to competing brands. Recently the pricing policy has been changed and now the pricing policy is competitive pricing policy as shown -Product PackingUnit/CtnRetailer MarginTrade PriceConsumer Price1.UHT MILKCtnsUnitsCtnsUnits1000ml126.09%101884.83108090200ml244.35%39116.2940817250ml275.97%58621.762123Source Company Internal DocumentsDue to low volumes produced the company has adopted the policy of selective distribution. The company offers various discounts to retailers to push their products into the market (Khan, 2012). The indirect distribution expect being used is shown below-Source Company Internal DocumentsDue to limited marketing budgets, the marketing department has to promote most of the products through on a lower floor The Line(BTL) activitie